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The Roth IRA Turned 20 in 2018

The Roth IRA (Individual Retirement Arrangement) first became available in January 1998. 20 years later it is still the single greatest retirement account for all individuals. The Roth IRA was established by the Taxpayer Relief Act of 1997 (Public Law 105-34) and named for its chief legislative sponsor, Senator William Roth of Delaware, hence the name “Roth” IRA.

For the first four years (1998-2001) the max Roth IRA contribution was only $2,000. Over the next three years (2002-2004) the max was $3,000. The Roth IRA saw another $1,000 increase in its max contribution over the next three years (2005-2007) to $4,000. It then again increased to $5,000 over the next five years (2008-2012). Today the maximum Roth IRA contribution still stands at only $5,500, where it has stood since 2013.

If you invested in a Roth IRA since day one through this past year (January 2008 to December 2017) you would have invested $81,500 of your own money. But how much would you investment be worth today? Based off a 10% annualized return your Roth IRA would have approximately $194,003. More than double your initial investment based off returns.